Managing talent in uncertain times is a daunting task, but subtle changes and thoughtful interventions can go a long way.

Microtrends. That is what a number of companies in India started a year ago, and rightly so, according to our experience and research, because they sensed that the story of an unstoppable India is, in the end, a story: it has a beginning, it has a middle, and, without thoughtful interventions, it may have an unexpectedly sad end for many.

Consequently, their responses had not been in the bandwagon mode of “more”: more growth, more employee spend and more change; rather they had been in sculpting subtle yet solid changes in their talent management programmes and in their business plans so that they remain sustainable in the long haul.

Through their strategic choices and their HR programmes, Indian companies tried to ensure that they maintain healthy profits, while managing the escalating costs of doing business. While they spent on their employees, they did not waste money on incentives that they have found to be meaningless. And, they were, contrary to all prevailing wisdom, also willing to draw the line on their spiraling employees costs by saying “this far and no further”.

By doing so, these companies were willing to face the risks of attrition after they had convinced themselves that they had done the best they could to design meaningful rewards packages. Their confidence was strengthened by their steadily, strong focus on developing and nurturing leadership talent.

Herein lies the story of the sustainable India and approaches to talent management that are being vindicated in this age of uncertainty.

Making economic sense

India grew on the back of her knowledge and people-centric industries, such as Financial Services, Information Technology, Retail, and others. However, due to the rather unnatural rise in business costs, primarily due to Indian employee costs having risen at double-digit rates since 2003, cost structures have been coming under severe strain. While businesses readily admitted this strain, they also worried about losing out on growth opportunities for the lack of people. Consequently, they felt caught in a bind: how to grab every opportunity to grow if they could not get more people and pay them superbly?

What exactly is it that the players who have decided to ‘hold steady’ are doing? Through Mercer’s experience both globally and in India, we have found that they are saying that we will grow, but we will grow at a pace we can maintain while protecting profits and returns. When we pay, we will first understand what employees want and value, before engaging in the endless spiral of compensation increases. And we will look at the future by building our leadership, while focusing on our current growth needs and evolving business priorities.

Getting rewards right

Smart companies have learnt that the issue is no longer just about paying top dollar or ensuring everyone gets a share of the remuneration pie. Non-financial incentives such as opportunity to learn and grow, visibility to senior management, supportive team and work environment are increasingly becoming relevant.

It is tempting to pay top dollar to attract the talent you want. However, Mercer’s “What’s Working” survey bears testimony to the fact that employees in India do not necessarily praise their companies’ benefits, compensation and performance management programs. Rather, they highly value the kind of work they get to do, and the impact they feel they can make. The survey therefore raises the question: are companies “wasting” their employee spend on meaningless programmes that employees may not really care about? Maybe.

Take an example of a company that has got its rewards strategy right. One of the leading IT services companies in India consciously positions compensation below industry median, while trying to attribute a value to other elements of the total employment value proposition. The company focuses on attracting the profile of employees it feels would fit well with its culture, invests in programmes that are meaningful to them, and boasts of a well below-median rate of attrition.

Our experience consistently shows that companies need to find a rewards strategy that works for them: for their company, for their people and for their business. Working on untested assumptions, stereotypes and generalisations not only does not help, but can actually hurt. When we work on generalisations and assumptions, the rewards package becomes about us – the people making the assumptions, not about our target markets. Smart companies have sensed this and acted accordingly, and such companies who have pushed back on ballooning compensation costs are better prepared to deal with a situation of pressure on costs and margins.

Delivering the ‘right’ interventions

Mercer’s experience with companies in managing their talent bears testimony to the fact that drivers of engagement span across the total job experience, the chance to learn and grow, and to make an impact. Interestingly, we have found that this is as true of younger people as it is of older workers. In fact, the younger generation may possibly be a highly misunderstood segment. Many of them care deeply about their work, have chosen their work areas with thought and care, and want to make an impact through their work.

Employee confidence in senior management (read good leadership), and the organisation’s reputation for great customer service are ranked highly as factors that keep employees engaged and motivated. How talent is utilized is clearly a key “get right”, while succeeding in the game.

A sizeable part of India’s working population entered the workforce in the last six years and are seeing business adversity for the first time. Having experienced a “bull run” in the employment scenario, this group is now likely to rethink what they value in their longer term careers; this presents a great opportunity for companies to now invest in building a more lasting employer brand.

We have seen that CEOs who are both visionary and pragmatic, and are backed by intrepid HR teams can deliver the right interventions.

Cairn Energy’s director of HR and Administration P Senthil Kumar noted in a recent presentation that Indian employees have moved beyond the need for lifetime employment. There are dimensions that they value in their jobs and organisations: Space, the ability to make an impact, the ability to preserve one’s identity and having a sense of meaning in their work.

Managing performance of the talent pool also requires a number of crucial philosophical choices.

To what extent do we hold employees accountable to goals set at the beginning of the year, which in the light of subsequent events were probably not the most meaningful? (and this is not an unusual situation, as we have seen in many sectors where growth has been slowing) Are relative performance measures more meaningful as compared to absolute ones?

To what extent do we err on the side of “informed subjectivity” and judgment, vis-à-vis driving mechanistic objectivity in performance assessment? Are we focusing on the ends, or the means?

In uncertain times, companies should assess efforts and initiative while determining rewards, as the ability to predict outcomes is somewhat eroded. Relative measures, assessing performance vis-à-vis a peer group is also a good practice.

Paying attention to the leadership pipeline

Besides cost pressures, a key issue faced by many organisations that have witnessed high growth in the last few years, is a feeling that they have large “bubbles” and gaps in their leadership pipeline. Companies had been under pressure to fill in leadership positions with less-experienced leaders due to the demands placed on a business from years of hyper growth. The leadership development lifecycle of an Indian manager has been compressed – development that used to take eight to ten years has been shrunk to about four years. This compressed lifecycle of leadership development lends itself to inherent business weaknesses.

On the other hand, companies that are making meaningful and considered investments in leadership development are finding that they are reaping the returns, in the form of a sustainable pool of leadership talent to build and grow the business.

The focus of many of these investments is on accelerated exposure to situations which may not have been encountered in a typical working day, given the truncation of the time to develop cycle. “Shadow Boards”, where younger high potential talent has opportunity to comment in annual strategy and company performance is one such innovative tool being used.

Strong, secure and sustainable

What kind of HR strategies must be in place to manage these workforce issues so that your company is ahead in the attraction and retention race which is more important than ever in times of business adversity? Many companies in India today are at such a crossroad, where key talent management choices need to be made. While there is no one simple answer that can fit all companies’ needs, we believe that the winners in uncertain times like these are those that recognise this as a time to forge lasting relationships with employees and invest in building talent capability for the future. And while the strategic, operational and talent dimensions of leadership are as, if not more important in these testing times, it is perhaps the ability to successfully navigate ambiguity and hold steady which will help bellwethers of tomorrow steer clear of the slowdown.

Years of hyper growth have resulted in a culture where mediocrity sometimes flourished; here is an opportunity for great companies to bring the performance orientation back into how they manage their human capital.